Windhoek – The Bank of Namibia (BoN) says it has managed to maintain five months import cover despite the economy shrinking eight percent due to COVID-19.
In a monetary policy review statement this week, BoN Governor Mr Johannes !Gawaxab said the value of foreign exchange reserves were marginally up – from US$2.32 billion to US$2.37 billion – in the first quarter of 2021 when compared to the last quarter of 2020.
The central bank chief attributed the increase to the strengthening of the local currency against the green back.
Mr !Gawaxab added, “Domestic demand remained subdued as evidenced by the slow growth. The growth is slower than the 6.7 percent recorded at the same period in 2020.”
He also said Namibia experienced a slight inflationary upsurge in the price of basic goods, driven by alcoholic and non-alcoholic beverages.
The BoN signalled optimism about growth prospects on the back of better aviation and tourism performance due to COVID-19 vaccination rollouts worldwide. There is also anticipation that metals and minerals prices will also firm, which would be a boon for the world’s fourth largest producer of uranium. In addition, Namibia is a major actor in the diamonds sector and is home to other resources.
The IMF has forecast growth of above six percent for the global economy this year, and of at least 4.4 percent in 2022.
Mr !Gawaxab kept the repo rate pegged at 3.75 basis points as a measure to stimulate domestic growth and give breathing space to those servicing long-term loans. The current repo rate (The baseline lending rate from central banks to commercial banks) is the lowest ever kept by Namibia since Independence in 1990.